The truth behind the price difference between generic and brand-name drugs.

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When it comes to prescription drugs, there's a lot of information out there. There's also a lot of misinformation -- and some of it could be costing you. According to the Generic Pharmaceutical Association, Americans spent over $325 billion on prescription medications in 2012, a number that is expected to rise in coming years. Billions of dollars could be saved on prescriptions (and better spent elsewhere), but not everyone understands why.

Here are some of the most common and costly myths surrounding prescription drugs, along with the truth behind them.

"My doctor prescribed it, so I must need it."

Your doctor has years of training and medical expertise and can be a trusted source of information, but doctors aren't perfect. Their values vary widely, and some may prescribe drugs when they aren't needed -- or worse, not check to see if they interact negatively with your current drugs. Recent research suggests that medicine is often prescribed in the U.S. when other interventions may be more appropriate. These could be relatively simple interventions, like making changes in diet and exercise.

There are a few simple steps you can take to avoid being overprescribed or misprescribed a medication. First, make sure you keep a list of your current medications and any side effects you experience, so you can inform your doctor. Second, let your doctor know at the beginning of the appointment that you'd like to have as few prescriptions as possible while still maintaining your health and that you're open to lifestyle adjustments. Lastly, make sure you understand the need for any new medication. You should never passively agree to a treatment regimen before understanding why you're using it.

"Brand-name drugs are more expensive because they're better."

It's easy to understand why this myth exists, since generic drugs aren't as heavily advertised as brand-name drugs. In truth, brand-name drugs cost much more (about 80 to 85 percent, according to the U.S. Food and Drug Administration) because the pharmaceutical companies selling them spent billions of dollars and many years conducting research to prove the drugs are safe and will work as intended. As a sort of compensation for that investment, the FDA grants a company exclusivity to sell the drug for a period after it is approved.

At the end of the exclusivity period, which varies depending on the type of drug, other companies can manufacture and sell the drug. Since they just have to find the formulation of the active ingredient, generics companies are able to sell the drug at a fraction of the cost. Because brand names are already widely recognizable thanks to years of advertising and exclusivity, the original manufacturer can keep charging higher prices even after research costs have been recouped. Often, the original company will manufacture both the brand-name version and generic version of the drug in the same factory and sell both.

"The FDA allows a 45 percent difference in effectiveness between generic and brand-name medication."

Along with the previous myth, this one stops a lot of people from inquiring about generics. The truth is that the FDA requires the same potency, efficacy, safety and quality for all drugs with the same active ingredient, whether they are brand-name or generic drugs. In fact, when it comes to generics and their brand-name counterparts, the only differences the FDA allows are with inactive ingredients, such as preservatives and binding agents, and those that affect appearance.

Those inactive ingredients may cause side effects in some people, but this is equally likely for the inactive ingredients in brand-name drugs. People most likely to experience these side effects are those with known allergies to foods or other drugs. For most individuals, however, generic drugs will work just as well as brand-name drugs, and switching can save a lot of money. In 2012 alone, generics saved American consumers about $217 billion.

"Newer drugs are better than drugs that have been on the market for years."

This myth isn't entirely false. Advances in science and technology have paved the way for a variety of drugs on the market. For instance, safe and effective daily oral pills are now available for diseases like multiple sclerosis, for which only injectables were available until recently. While this is great for MS sufferers, the success isn't necessarily transferable to other diseases. For those suffering with a frustrating or painful illness, the allure of a new drug can be enticing, even if the disease is currently well managed.

Yes, it takes a long time and a lot of research to make sure a drug is safe and effective before the FDA approves it, but data collection doesn't stop there. Even after a drug is approved, adverse reactions and serious adverse events are sometimes reported through the FDA's MedWatch system, and manufacturers update the product's labeling accordingly. Sometimes, the FDA requires additional package warnings or even reverses drug approval if new data are strong enough. The truth is that the longer a drug is on the market, the more data are available to back its safety.

Lacie Glover writes for NerdWallet Health. She has a background in chemical and clinical research and aims to empower consumers to find high quality, affordable health care. Glover is a blogger for Eat+Run. You can follow her on Twitter @LacieJaeGlo, connect with her on LinkedIn or circle her on Google Plus.

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crazy ray

The real reason name brands are so much more expensive is the hundreds of millions of dollars that it costs to bring a drug to market. Generics don't spend that money because the drugs are already approved. To top that off, pharmaceutical companies make deals with other countries over how much they can charge. The US government doesn't do this so it's up to American citizens to make up the difference. That's why drugs are cheaper overseas and why manufacturers don't want you to buy them.

you can't just make a blanket statement like that. Some people need the drugs they are prescribed to LIVE, so it is irresponsible to say "say no to drugs"...........people are all different with differing needs.

New drugs have a protected patent period of 17 years FROM DATE of APPLICATION and not the date drug actually is available for prescribing. Also Americans are very fortunate to have the FDA approval process requiring that EVERY drug be SAFE and EFFECTIVE for approved indications (uses) This is not the case for "herbal remedies" and the like may in fact cause more harm than good. I sure hope that these too will have to be approved by FDA for safety and effectiveness as these are all to often a waste of money at best. Credentials? Retired RPh

Never trusted the US drug administration,and under this regime much less,i only get prescriptons as a last resort,and in my opinion generics are mostly made in China or third world Nations,they are for the most of them pure crap

I try not to get on any drugs if it's not necessary. I have actually bought name brand drugs instead of the cheaper version before because of that myth though. Its good to know that the not as popular brands are just as good.

A large percentage of those brand name drugs were developed by universities and NIH and given, gratis, to the pharmaceutical industry. R & D budgets in most drug companies are smaller than their advertising budget!No one is worth $100 million a year, yet many CEOs of drug companies are paid that.They make their profits over our dead bodies.

Americans simply want a pill to cure their ills and can be convinced of anything. Many unneeded but expensive drugs are prescribed because the patient saw them on TV and browbeats the physician into prescribing them. It should be against the law for Medicare or Medicaid, or Tricare to pay for any prescription drug that is advertised on TV.

Utterly preposterous. I'm a prescribing physician and prescribe generics for all of my patients with the exception of the very few who think as you do. Why? Because they are effective (almost always) and are immensely less expensive and therefore result in better patient compliance. My wife and I use generics exclusively, as do virtually all of the doctors I know and associate with daily.